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Is high-end VR a dead end?

The Rift, Vive, and PSVR could fall short of success on their own while still securing a brighter future for VR

The current generation of virtual reality is not dead, but it's not exactly full of life, either. What once was a pulsating buzz has faded into the background of an industry, not because there are newer, shinier toys to play with, but simply because for all the newness and shine of VR, there has been little evidence that a significant audience exists for the experiences we can deliver at this time.

Earlier this week, Oculus instituted a temporary $200 price cut of the Rift, dropping the headset and its Touch controllers to a $400 bundle that comes packed with seven free games (including Lucky's Tale, Medium, Toybox, and Robo Recall) and an Xbox One controller for good measure. That's in addition to the $200 price cut Oculus rolled out in March for the headset and Touch combo, meaning the company has slashed the price by 50% in just four months.

On its own, this could actually be an encouraging sign, but taken in context of the rest of the news coming out of the VR sector, it's more concerning than convincing. For one, Oculus looks to be bringing up the rear among the three major high-end VR options on the market, despite being a first mover and having the significant financial backing of Facebook. Through the first half of this year, tracking firm Superdata put the Rift's installed base at just 383,000 units, compared to HTC Vive's 667,000 units and PlayStation VR's 1.8 million.

"The shuttered Story Studio was exactly the sort of investment in a potentially disruptive medium you would expect a company with long-term ambitions to keep"

Even ignoring its relative sales position, Oculus is already in a tough spot in the enthusiast VR fight, technologically a step behind the more expensive Vive, but still more expensive (when considering the cost of a VR-capable PC) and less mass market than the PSVR. That's a difficult problem for marketing anything, doubly so when what you're selling is an experience that by its nature needs to be experienced to be fully understood, triply so when you're drastically scaling back the number of demo units in retail locations where interested customers could get their first taste of VR.

I also question Oculus' decision to shutter its in-house Story Studio, which was set up with Pixar veterans to show how VR could shift the medium of film as much as it could games. The studio's Henry won an Emmy in 2016. Its follow-up, Dear Angelica, premiered at Sundance earlier this year to rave reviews and has been submitted for Emmy consideration at this year's awards, which are still a few months away. In short, Story Studio was exactly the sort of investment in a potentially disruptive medium you would expect a company with long-term ambitions to keep. Instead, they cut it loose, with head of content Jason Rubin essentially saying it was time for external filmmakers to pick up the narrative VR ball (albeit with some $50 million in funding from Oculus).

There's a bit of a theme there. Just a couple months before closing Story Studio, Rubin pointed out for at GDC that Facebook--and by extension, Oculus--isn't a content creation company.

"Facebook's not a media company," Rubin said. "So there may be a day where Facebook says we're going to head towards our core competency... That's why I don't have internal teams. I have exactly one group of three people besides Story Studios because that didn't exist outside."

Facebook didn't pay $2 billion for Oculus in 2014 because it wanted to make games. It wanted VR to be a popular thing it could leverage for its social network. If HTC Vive or Sony or Microsoft can make VR work better than Oculus, that still gets VR where the social network wants it to be. That's not ideal for Facebook, but after the Rift's slow start, the hundreds of millions it already owes in court judgments, the hundreds of millions more it might be made to pay in the future, and seeing the face of the VR revolution leave under a cloud of controversy, one could understand if the company's commitment to VR began to waver.

"I'm not sure I want to bet the future health of VR on Sony's continued support for a market that is (for now, at least) peripheral to its core business"

Speaking of the competition, I'm not terribly optimistic with what they're bringing to the table. Sony's PSVR is leading the pack, but I'm still skeptical whether the company's interest in the hardware will be any longer lasting than its support for Vita, or Wonderbook, or PlayStation TV, or Move, or EyeToy, or stereoscopic 3D. Sony's E3 conference featured some promising games in Polyarc's Moss, two titles from Until Dawn developer Supermassive, and Skyrim VR, but little that stands out as a system-seller the way that Resident Evil 7, or even the prospect of last year's Batman and Star Wars VR experiences might have. When asked at E3 about whether that lineup would boost PSVR adoption, Sony's Jim Ryan was unsure.

"I think we are still really just learning about VR," Ryan said. "When hopefully we meet in a year's time, I will be able to give you a better answer to this question. It still won't be a perfect answer, but I'll know more."

That's not exactly an overwhelming vote of confidence from PlayStation's chief marketer. I'm not sure I want to bet the future health of VR on Sony's continued support for a market that is (for now, at least) peripheral to its core business.

The situation with HTC and the Vive underscores another issue when trying to establish an emerging field like VR. Vive launched at the cutting edge, but since then has rolled out object tracker peripherals and a wireless adaptor, respectively giving developers more options and addressing a key complaint around high-end VR. In both cases, they would be better served as being part of the core hardware package rather than optional add-ons for what is already the most expensive option on the market. For the next generation of VR, perhaps they'll be standard.

"Who will invest in the next generation of enthusiast VR--on either the consumer side or the manufacturer side--if this generation disappoints?"

But who will invest in the next generation of enthusiast VR--on either the consumer side or the manufacturer side--if this generation disappoints? How long does a VR generation need to be before someone who spent $800 on a Vive (not to mention the cost of a VR-capable PC) feels they got their money's worth and would re-up for a successor? How many great games does it need to have? How many generations does an HTC or Facebook need to take a bath on before the business turns around and justifies the continued investment?

Then there's Microsoft, which will enter the fray this holiday season with its "mixed reality" VR headsets for Windows that are cheaper and require less of a set up than Oculus or Vive, but appear to make compromises on the technical side to get there. It's telling that even with Microsoft launching the high-end, VR-capable Xbox One X this year, it is foregoing any sort of console VR push and relying on higher resolutions and better frame rates for Xbox One games as the sales pitch for a One X. Phil Spencer told us at E3 that VR was still years away from the mainstream for gamers, suggesting the company was waiting to launch its console VR until it had a proper wireless solution ready.

At this point, it seems more likely to me that the current enthusiast VR market is an expensive R&D exercise that won't produce successful systems, but will lay the groundwork for the actual mass market VR, which will instead evolve both in audience and use-cases from the mobile VR world. (We call it mobile VR, but I don't think I'm alone in having never once seen someone using a mobile VR headset on the subway, in the security line at the airport, or in the waiting room at a dentist.)

A number of the VR developers I've spoken to have mentioned wires, price, system-selling software, and installed base as key issues VR needs to tackle to become truly mainstream. As Google Daydream and the Oculus-powered Gear VR have shown, the first two are all but solved problems in mobile VR thanks to the use of existing smartphones. As for the other two, when your system is only $100 or so, the definition of a system-seller changes dramatically, which then has plenty of beneficial implications for the installed base. (Promotions like Samsung giving away Gear VR with new Galaxy phone purchases don't hurt, either.)

All mobile VR really needs are better interfaces and more powerful phones. The Gear VR motion controller is a good first step for the former, and the latter is improving all the time. If VR is really going to go mass market, doesn't it make more sense for it to grow not from the high-end early adopter market who would have dropped $600 on a PS3, but from the masses who made a compelling novelty like the $250 Wii a phenomenon?

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Latest comments (13)

Jill Zinner Talent recruitment 3 years ago
Good read.
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Peter Brobby Software developer, Playtech3 years ago
One of the main things holding back VR adoption is the lack of an official iPhone VR head set. On the high end, Valve releasing a VR compatible Half life 3 would be the killer App that the sector needs.
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Christopher Dring Publisher, GamesIndustry.biz3 years ago
For me, the barriers of entry are just too high. Not just the costs involved, or even the social barriers of looking silly with a great big headset on... but the time barrier. I love showing people my PlayStation VR. But setting it up takes ages.
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Brendan Sinclair North American Editor, GamesIndustry.biz3 years ago
I've been wondering if the new VR wave might have been better served by going mobile first and then introducing high-end sets. By going the other way around, mobile VR was instantly thought of as an inferior experience rather than judged on its own merits. Also, the VR true believer developers would have worked on mobile VR instead with no alternative, producing a more compelling software lineup.
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Jeff Kleist Writer, Marketing, Licensing 3 years ago
The issue is price and PC. people aren't buying expensive hardware to buy more expensive hardware.

The $400 price tag is going to move a lot of units. Pretty much everyone is sold out.

IMO Oculus is a much better product than Vive st half the price, but much of VIves customers seem driven by the fantasy of room VR. The masses want to sit on the couch. Everything we need to know about VR can be learned from Kinect. Except there isn't an active brigade crapping on VR nearly to the degree.

Honestly the biggest issue I see is that Oculus charges $50 for new hdmi cab,es that it's not a question of if but when they break. And they're proprietary. And no one has yet cloned them Doen to the $25 or so price they should be. But the masses are allergic to wires, so until they come up with a low latency wireless solution that's plug and play, it's an issue. It never ceases to amaze me how many people complained about the Xbox power brick, which they never deal with after the first five minutes, and does nothing but compromise cooling and performance by making it internal. But they threw fits about it for years.

Which is why Scorpio isn't just launching Rift compatibility. They want mass market.

Edited 1 times. Last edit by Jeff Kleist on 15th July 2017 5:19pm

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For me the best observation of this latest phase of the attempt to adopt VR as a platform for mainstream application – is that the product was forced into reality by enthusiasts not looking at a goal of adoption, but just wanting to force into reality a thing they saw as “cool”!

We now see that the idea behind VR, holds water (seen by its popularity), but the idea of the high-end VR adoption beyond enthusiasts and the PC Master-race fanatics is limited. Issues of price, complicated installation, and limited compelling content all playing a part in poor sales.

When Sony first pushed the HMZ in 2011 they had a plan towards a console/smartphone future – it was the rush of the 2013 Kickstarter, and the “ballpark” promises that fuelled (prematurely) the current VR PC (high-end) route, that seems to be seen as a possible dead-end, as even Oculus looks at a “standalone” route.

For us in the out-of-home entertainment market, we can afford to look at the high-end application as we offer a high-scale entertainment experience – and usually ride the wave early for new technology. But for the Indies and Enthusiast that supported the Oculus mission – they may find they are abandoned by a company fixated on social media, rather than high-end PC specs!

Edited 1 times. Last edit by kevin williams on 15th July 2017 5:39pm

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Klaus Preisinger Freelance Writing 3 years ago
Pick any successful enthusiast piece of hardware. Everything is geared towards immediacy. Low lag monitors with high refresh rates, high frame rate games, keyboards and mice polling 1000 times a second. The player's reaction is the limit, any hardware adding milliseconds to that limit is the enemy.

What did Occulus and Vive do? They basically added 500ms to every action by making the player act it out with motion controls. Demos very well, I grant them that, but could not be further from how people actually play games at home or want to play them after thinking about it for a while. It is fundamentally incompatible to the mindset of minimizing any movement during gaming. What you are left with is not the next generation of immersive display technology, but instead a Wii with a display gimmick. Great display gimmick or not, nobody needs a Wii in 2017. The day VR decided it did not want to be a display technology first, but instead an expensive resurrection attempt for motion controls, it died.

Out of home novelty attractions? Sure why not.
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Jeff Kleist Writer, Marketing, Licensing 3 years ago
@Klaus Preisinger: A great many games on Oculus support the game pad.

And frankly, the best VR experiences are about motion controls. Star Trek, Climb, Robo Recallecho Arena. But pads are not out of the question.

And 500ms of lag? Most definitely not. 50 I'd give you.

People object to the standing and walking. As long as they're included, and hey make sense, which the touch controller do, people will use them. It's when the gimmick doesn't make sense. Like asking me to use motion controls on a 40 hour RPG to swing my sword. But ten minute bursts of Robo recall where I tear robots apart with my bare hands and gun the rest Doen like the Wild West? Motion controls are awesome.

Restraint is the issue. Make them make sense and not a gimmick
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Klaus Preisinger Freelance Writing 3 years ago
I am not referring to the actual input lag of the motion controller, but the time between your brain thinking the action and your muscles having them acted out in such a way that the action gets recognized by the game. The closer the required motion input is to mimicking the real world action, the more time you need. Recognize, point and shoot in Robo Recall = 500ms, same action in Overwatch = 15ms. That is 485ms more delay between deciding on the action and getting the reward from your brain. Earlier point and shoot games, such as Virtua Cop, Time Crisis and Point Blank had this problem as well and tried to get around it by making it all about the chain and limiting your action radius to 10 degrees in front of you.

When it comes to the games, I try to take a precise look at my thoughts why I like something. Is it the game, or is it the re-enactment fantasy? Sure, you boot it up and for the first five hours the experience is fun either way. But all the re-enactment fantasies wear off beyond that point. The reenactment fantasies are certainly good, but we have seen them on the Wii, just with less fidelity. A lack of fully immersive visual fidelity is not the reason the Wii went away. In some cases, the re-enactment fantasies on the Wii were better. I certainly rather sit on the couch and point at the screen playing House of the Dead, than stand in the room for Robo Recall. Sure, Robo Recall is the better reenactment fantasy, but the gameplay of HotD holds up better.

And how long can you play VR on a Sunday afternoon honestly? Games such as Subnautica and Adr1ft have a good length being reenactment fantasies. They do not overstay their welcome. Games which can motivate by being games, such as Elite Dangerous, have no problem motivating you for a lot of hours, but they run into the problem of how long can you really wear an Occulus. Not just from a standpoint of physical exhaustion, but also form a perspective of being locked into doing that one thing and nothing else.

Edited 1 times. Last edit by Klaus Preisinger on 16th July 2017 8:56am

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@Klaus Preisinger:
Out of home novelty attractions? Sure why not.
Ha, ha - have to love the monstering of Out-of-Home by some "freelancers" - it seems we have gone from "this is a niche, no one will want it..." too "it's just a novelty, it won't last..." to now "hey, why are Nintendo getting involved!!?"

I get it, you built your dreams on the over estimations and hyperbole of a couple of Kickstarters - they proved to have feet of lead (and business skills of sand), and now your angry and resentful. We get it.

Shooting the messenger, while trying to dish the resulting industry we always told you was going to emerge, will not really cover your duplicity though! But, hey, whatever it takes ;)

Edited 3 times. Last edit by kevin williams on 16th July 2017 12:02pm

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Klaus Preisinger Freelance Writing 3 years ago
Even a healthy industry can be a seemingly unhealthy proposal for a company with aspirations the size of Facebook. Would you rather sell your VR headsets to a company who then builds a business around it in places measuring their visitors on a per year metric? Or would you rather sell to each of these endcustomes directly and have them engage with your sales platform multiple times per week, instead of not at all? (Because only the venue operator buys from Facebook). Without harboring ill will towards amusement parks and venues, Facebook's bar of expectation has to be higher than out of home.

No matter how good an out of home VR venue is, it cannot be an alternative to reaching the mass market directly. South Korea may have the market for out of home rent-a-PC for a few hours, Germany and other European prime targets for VR certainly have not. Out of home VR then competes with physical activities. Of which there is no shortage while having a far high social standing in Germany than computer gaming. Not to speak of what people will be willing to pay and whether that provides for enough of a profit margin to compete for good inner city spots.

I am by no means angry at Nintendo or resentful towards VR. I rather try to be very conscious about why I have fun, what the components of my entertainment are and how long they will last. The reality is that every form of entertainment has a life-span, a certain amount of hours you can wring out of it on average. Motion gaming is not bad for somebody who never played it, but at the same time you cannot squeeze as many hours out of motion gaming from a person than you could with an MMO, or DotA experience, or even a match3 type game. Else there would be more flick-your-phone mobile sensations than there actually are (fun attempt though: Sony Yari bowling game) Depending on the actual implementation, every type of game or technology has its limits, VR is merely hitting the limits of its current implementation (i.e. high hardware demands, motion control bundled along with it). As a result we see Facebook branch out with a mobile version, instead of just doubling down on the PC VR; they know they are hitting limits and need to reinvent.

Facebook is certainly not going to say no to amusement parks and attraction centers. But at the end of the day, they probably dream of amusements parks licensing their IP for a ride, instead of reviving the arcade business of 30 years ago. I do not doubt VR has the ability to make an existing attraction or amusement park better, but I do doubt current VR can be an attraction place of its own. VR Shinjuku is nice, but it is a long way until Stoke-on-Trent or Villeneuve. I am not saying that out of spite, or for the sake of just hating on it. If I get into my car, it is a relaxed 30 minute drive to one of the first German VR centers. I know the state of affairs in 2017 and it cannot get 2018 soon enough.

At the same time, I do not believe VR will go away, but it will undergo a number of mutations until people stop buying monitors for their prime gaming experiences and more mutation even until VR can tackle the living room TV screen as the most important screen to be monetized by digital services.
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A very long answer to a very short reality - consumer VR is 10-years off [FB estimation], and out-of-home entertainment is making money now from the technology - simple!

The consumer market may be the only angle you can see as viable, but I think the cinema industry can teach you something about wider opportunities!
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Jeff Kleist Writer, Marketing, Licensing 3 years ago
For the record, as I've stated before room VR is never going to be a thing at home

I play Robo Recall on the couch. You move with the stick, not by physically turning. Don't think you've played it Klaus.

And I think you're way under with 15ms on overwatch. The number of people with that reaction time is nil. Input lag on wireless controllers is about that by itself.

There's many steps to perfecting the technology. In goggle tracking is obviously th next step with no need for external sensors or markers. In the meantime, Dave and Busters has had various VR installations over the years, from the old monstrously heavy CRT goggle ones to the beach defender game with the drop down helmet. It's very realistic they'll have a Robo Recall or some similar game setup in the near future, or that they'd license MARIO Kart VR. In fact the biggest thing stopping it is the need for an attendant. D+B very successfully has adapted the arcade business, and at those kind she of places that aren't VR exclusive it certainly works. They rent pool tables, ping pong, they used to even have a motion simulator ride. Every single in every I've been in has 8 Daytona machines you can't tell me they can't charge double for 4+ player MARIO Kart VR.

Vr/AR is ten years away, but the proving ground is noe, and all the things people will take for granted are there, just needing to be made smaller. To be honest my biggest objection to the cel phone VRis that the goggles need to accept phones in popular cases. Xtracting it from an Otterbox is a five minute thing, and way too much effort.

I'm curious how much of an impact Ready Player One will have in March. It's either going to be huge or tank, I really have no idea which way it's going to go.
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